As advisors to clients in many different industries and lines of business, we are often asked what we are seeing and hearing in the market, and what trends are emerging within the small business arena after what has been a fairly uncertain twelve months.
As the economic recovery continues to gain speed and the Australian economy sits in a relatively strong position, over the past few months we have seen an increase in transactions and interest in buying businesses.
Given the current state of play in financial markets, it is evident that investors are looking for investment alternatives as they seek higher returns on their investment than the traditional banking and finance systems are delivering.
With this in mind, there is no time like the present for business owners and managers to look at the state of their business affairs and to look at ways to ensure their business is sale ready and in the best position to sell should an attractive offer to buy the business come along. Taking these steps will help to maximise the value of the business now and into the future.
In particular the following matters can impact significantly on business value:
- Does the business have a clear, executable strategy for the future?
- Does the business have appropriately skilled personnel in key positions, who are appropriately rewarded?
- Is there a clear understanding of the market in which the business operates, its competitors, and the opportunities for the business?
- Does the business have key compliance matters in hand?
- Are key contractual relationships in order?
As well as ensuring you have the above matters covered, recommended areas to review include wages, financial systems, policies and procedures, contractors, and superannuation, to ensure they are up to date, accurate and compliant.
It is critical to ensure these areas of the business are in a healthy position in case a sale opportunity does arise, as by not doing so could derail, or significantly delay, any possible sale transaction.
Planning early will enable you to exit on your terms whenever the opportunity arises as when the time comes to sell and exit your business, you want to ensure the process is as smooth and as financially beneficial for you as possible.